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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH, JM & SHRI MANOJ KUMAR AGGARWAL, AM
Per Manoj Kumar Aggarwal (Accountant Member) 1. The captioned appeal by assessee for Assessment Year [AY] 2011-12 contest the order of Ld. Commissioner of Income-Tax (Appeals)-29 [CIT(A)], Mumbai, Appeal No.CIT(A)-29/IT- 89/ITO.18(2)(4)/14-15 dated 29/01/2016 by raising the following Grounds of Appeal: - ITA.No.1741/Mum/2016 Nitin Kumar Ganeriwala Assessment Year 2011-12 1. On the facts and circumstances of the case and in law, Ld. CIT(A) was erred in confirming the disallowance of interest expenses of RS.4,02,390/- 2. On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in confirming the addition of Rs.42,64,480/- as unexplained cash credit u/s.68 of the Income Tax Act.
The assessment for impugned AY was framed by Ld. Income Tax Officer 14(2)(1), Mumbai [AO] u/s 143(3) of the Income Tax Act,1961 on 10/03/2014 wherein the income of the assessee was determined at Rs.55,31,970/- as against ‘Nil’ return filed by the assessee on 30/09/2012. The only issues involved in the present appeal are disallowance of certain interest expenses u/s 57 and certain additions u/s 68. 2.1 During assessment proceedings it was noted that the assessee obtained certain loan from LIC @9% and advanced the same to various parties against interest rate ranging from 12% to 15%. However, few loans were granted without any interest. The interest income so earned by the assessee amounted to Rs.12 Lacs as against interest expenditure of Rs.16.02 Lacs and therefore, the assessee’s claim of interest expenditure was restricted to the extent of Rs.12 Lacs i.e. interest income earned by the assessee. The same resulted into disallowance u/s 57(iii) amounting to Rs.4.02 Lacs. Upon confirmation by Ld. CIT(A), the assessee is in further appeal before us. 2.2 The second addition u/s 68 was made pursuant to AIR information in Form-26AS where the assessee was found to have made transaction amounting to Rs.55.02 Lacs. The assessee attributed the same to cash received from various parties, however, failed to produce the sufficient documentary evidences to substantiate the same which resulted into ITA.No.1741/Mum/2016 Nitin Kumar Ganeriwala Assessment Year 2011-12 addition thereof u/s 68. Before Ld. CIT(A), the assessee tabulated the receipts under various heads as noted by Ld. CIT(A) on Para 5.2 of the appellate order. The assessee contended that he was director in an entity namely Vijay Laxmi Textiles Pvt. Ltd and acquired the debts of the said entity amounting to Rs.39.64 Lacs and the cash deposited in the bank represented recovery from those debtors during impugned AY. However, Ld. CIT(A) noted that the said entity discontinued business activities since March, 2005 and it owed an amount of Rs.116.97 Lacs to the assessee whereas its debts stood at Rs.278.26 Lacs and the assessee took over the debts only to the extent of Rs.39.64 Lacs. The Ld. CIT(A) also noted that the assessee took over the debts on 02/04/2007 and could not recover any amount till April, 2010 when the recoveries suddenly starting pouring in the assessee’s bank account. Further out of total stated recoveries of Rs.38.80 Lacs the major amount of Rs.23.22 Lacs were recovered only during one month period from 22/04/2010 to 28/05/2010 and all the payments were below Rs.20,000/- and mostly around Rs.19,000/-. On the contrary, the assessee failed to adduce any evidence to support its stand and also could not file any confirmation from any of the debtors to support the same. Resultantly, Ld. CIT(A), upon factual matrix, confirmed additions u/s 68 to the extent of Rs.42,64,480/-. Aggrieved the assessee is in further appeal before us.
The Ld. Authorised Representative [AR] pleaded for another opportunity to the assessee to substantiate his stand which was opposed by Ld. DR on the ground that the assessee’s argument had no strength since the assessee miserably failed to support its stand in any manner.
ITA.No.1741/Mum/2016 Nitin Kumar Ganeriwala Assessment Year 2011-12 4. We have heard rival contentions and perused relevant material on record. After due consideration, we concur with the stand of Ld. DR that the assessee miserably failed to substantiate his stand in any manner. We find that the observations made by Ld. CIT(A) in Para 5.3.2 was quite pertinent and justified since the complete onus to prove the source of cash deposit with cogent material and sufficient documentary evidences was on the assessee and the assessee failed to demonstrate the same. Not even single confirmation / verification could be filed by the assessee. Further, even during hearing before us, the Ld. AR expressed inability to produce any debtors for verification to confirm the transaction. Therefore, we do not find any strength in assessee’s argument. So far as disallowance of interest expenditure u/s 57(iii) is concerned, the same was also justified since the interest bearing loans were utilized to advances interest free loans and therefore, the excess expenditure could not be allowed to the assessee. Hence, on factual matrix, we find no reason to interfere with the stand of Ld. CIT(A).
Resultantly, the appeal filed by the assessee stands dismissed.